The Economic Cost of Virginia’s Opioid Epidemic

Source: “2017 State of the Commonwealth” report

The rate of drug overdose-related deaths is lower than Virginia than it is in the United States as a whole — 16.5 deaths per 100,000 compared to 19.8 nationally — but that is about the only morsel of consolation that can be derived from a special focus on the opioid crisis in the 2017 State of the Commonwealth Report.

The number of opioid deaths in Virginia was relatively stable between 2007 and 2010, after which it began climbing sharply as the epidemic spread, reaching 1,138 in 2016. Aside from the personal tragedies of overdose victims and their families, the economic cost has snowballed as state and local governments has spent more on emergency response and substance abuse treatment, and as drug addicts have dropped out of the workforce.

“The consensus is that opioid addiction causes individuals to drop out of the labor force by making them less ambitious, more lackadaisical and even unresponsive to ordinary labor market incentives,” states the report, written by Robert M. McNabb and James V. Koch with the Center for Economic Analysis and Policy at Old Dominion University.

Labor force participation in the U.S. has been on decline for many years, reaching a 40-year low in May 2015. As of Sept. 2016, 11.4 million men between the ages of 25 and 54 were not working or seeking work. Forty-four percent of men not in the labor force were taking painkillers daily; by contrast only 20% of working men and 19% of unemployment men took painkillers. A Federal Reserve Bank of Boston-sponsored study estimated that 20% of the decline in labor force participation could be attributed to opioid use and abuse.

What is the cost of such behavior to the Virginia economy? This is not easy to measure. If, however, labor force participation rate data in Virginia have declined 3 percent due to opioid addiction, then the Commonwealth has experienced between $4.5 billion and $7.6 billion in lost productivity. To put it another way, the lost productivity is at least equal to 1 percent of the Commonwealth’s gross domestic product for 2017 and may be as high as 1.6 percent.

In addition, in 2008, untreated substance abuse resulted in $613 million in public safety expenditures (police, jail, prison) and health car services by local and regional governmental units, according to a Joint Legislative Audit and Review Commission (JLARC) study. In 2010, the average hospital stay for drug abuse patients was 3.8 days, and the treatment cost was almost $30,000. “No doubt these numbers are higher today,” the authors write.

What is to be done? While the opioid epidemic has become a top-of-mind, national issue, some physicians are insufficiently trained in how to prescribe opioids while managing chronic patient pain. “Both physician and pharmacy education are in order.” McNabb and Koch also recommend researching nonaddictive painkillers, creating a national prescription registry to catch abusers who obtain multiple prescriptions from multiple physicians, and funding the use of methadone to wean users from their addiction and naxalone to reverse the effects of overdoses.

But there are no magic solutions. “Opiate misuse and abuse ultimately reflect our society — the values attitudes, laws, geography and range of economic opportunities that together make us who we are. Hence, one cannot press a single button and eliminate the scourge of opiate addiction because this wave of abuse represents the conjunction of a set of complex phenomena deep within us.”